Multiemployer Pension law frees union local to cut plan benefits, avert fund insolvency

Sources: U.S. Treasury Department; Iron Workers Local 17, Cleveland; CP staff

The Treasury Department has certified the results of an election in which Iron Workers Local 17 Pension Fund participants approved benefit cuts, effective February 1, to avoid fund insolvency in 2024. Votes were cast 2 to 1 for a plan reducing accrued benefits and eliminating early retirement subsidies plus extra benefit credits.

“Trustees appreciate that a majority of the participants understood the suspension plan,” Local No. 17 officials note. “At the time of the projected insolvency in 2024, the Pension Fund would have been in line with many other insolvent plans seeking to share the scarce financial assistance available from the Pension Benefit Guaranty Corporation.”

Enabling the election was the Kline-Miller Multiemployer Pension Reform Act of 2014. It establishes a new process to propose a temporary or permanent reduction of pension benefits if a plan is projected to run out of money before paying all promised benefits. Kline-Miller requires the Treasury Department, in consultation with the Pension Benefit Guaranty Corporation and Department of Labor, to review a multiemployer pension plan’s application to reduce benefits and determine whether it meets the requirements set by Congress.